Northrop Chairman Thomas V. Jones, two other executives and the company itself are the subjects of a criminal investigation into payments made to Korean firms as part of the company's unsuccessful effort to sell its F-20 fighter jet, according to a reliable source. The three men were ordered to testify before a federal grand jury in Los Angeles and the company was ordered to produce documents related to its Korean deals, Northrop disclosed Wednesday.

After a five-year investigation, the Justice Department is dropping its probe into allegations that Northrop Corp. and its key executives bribed South Korean officials in an effort to sell the F-20 jet fighter, according to legal sources and Justice Department correspondence.

After a five-year investigation, the Justice Department is dropping its probe into allegations that Northrop Corp. and its key executives bribed South Korean officials in an effort to sell the F-20 jet fighter, according to legal sources and Justice Department correspondence.

Northrop Chairman Thomas V. Jones, two other executives and the company itself are the subjects of a criminal investigation into payments made to Korean firms as part of the company's unsuccessful effort to sell its F-20 fighter jet, according to a reliable source. The three men were ordered to testify before a federal grand jury in Los Angeles and the company was ordered to produce documents related to its Korean deals, Northrop disclosed Wednesday.

Northrop has announced a number of management promotions, including the establishment of a new executive position for missiles. Joseph T. Gallagher, 52, has been elected senior vice president-programs. Steven R. Smith, 60, succeeds Gallagher as corporate vice president and general manager of the aircraft division. James E. Kinnu, 57 has been named aircraft division deputy general manager for missiles, a new position. Meanwhile, Welko Gasich, 66, executive vice president-programs, has retired.

Welko E. Gasich has been promoted to executive vice president-program management at Northrop Corp., Los Angeles, a newly created position. He previously was senior vice president for advanced projects. In his new position, he reports directly to Northrop's executive office, which consists of Chairman and Chief Executive Thomas V. Jones and Frank W. Lynch, president and chief operating officer. MGM/UA Entertainment Co.

Northrop eliminated five executive-level positions Monday and retired or reassigned the men who held the jobs in an effort to streamline its organization. Two senior vice presidents, Joseph T. Gallagher and C. Robert Gates, will be retired within 60 days, the company said. Gallagher is 52 and Gates is 64. Northrop President Kent Kresa said in a prepared statement that the changes are aimed at cutting costs, improving communications and concentrating responsibilities in the corporate office.

A federal grand jury in Los Angeles investigating payments made by Northrop to two Korean organizations has subpoenaed former Northrop vice presidents Donald Foulds and James A. Dorsey, according to knowledgeable sources. The grand jury earlier subpoenaed Northrop Chairman Thomas V. Jones, Executive Vice President Welko Gasich and former chief financial officer William J. McGagh, as well as the corporation itself.

I am a former officer of Northrop Corp. The Times published an article "Northrop Dealt New Legal Blow Over Payment" (Sept. 20) that erroneously stated that "Gasich's lawyer did not return a telephone call" made by your reporter to inquire about an arbitrator's decision in a Northrop case. My counsel did return your reporter's call; he left a message, but your reporter did not return the call. I am deeply concerned that the erroneous statement that my counsel failed to respond to your reporter's call left an impression that I was unwilling, directly or through counsel, to respond to the arbitrator's erroneous decision.

Justice Department investigators looking into the legality of $7.75 million in foreign payments that Northrop made to South Koreans in 1984 are examining whether some Northrop officials may have eventually received some of the money, according to knowledgeable sources. In an apparently related development, the Internal Revenue Service has begun its own probe of Northrop's payments to the Koreans, apparently to determine whether American recipients of the funds properly reported the income.

Two flamboyant former nightclub owners that Northrop hired as consultants to represent it in South Korea spent $90,000 a month in the mid-1980s entertaining South Korean government officials at saloons, hostess bars and Korean-style geisha houses in an effort to sell the firm's F-20 jet fighter. The disclosure, along with many new allegations about Northrop's South Korean business dealings, is contained in a lengthy report by the Washington law firm of Jones, Day, Reavis & Pogue.